A viral Reddit post has sparked a heated debate on whether it is better to rent a home and save money or buy a house with a hefty loan. Internet users are having divided opinions about whether it is wise to purchase apartments with high monthly installments at this time of job instability or whether it is more valuable to buy your own home than to live in someone else’s.
In a post titled, “Do NOT take a loan for buying a flat! Rent instead”, a Reddit user shared his perspective on buying a home.
The Reddit user said, “Any semi decent flat in a tier 1 city nowadays is nowhere below 1.5 to 2cr. Let’s assume the flat costs 1.5cr because we’re being optimistic here. So if you do a 20% down payment on that 1.5cr it comes out to 30lakh, which means that your loan amount will equal 1.2cr.”
According to the user, a home investor would have to pay Rs 80,000 per month at the current home loan rates, which are roughly 7.5% p.a. “till your retirement and only then will you be considered the “owner” of that flat.”
He said that the interest a home investor pays will be equal to the value of their flat. “You’re just a tenant and the bank is the one who actually owns the flat till you pay off your loan. You’re not the owner. You’ll be kicked out if you lose your job and miss your EMI payments,” he wrote.
The user claimed that apartments depreciate in value with time, making them unfit to be inherited by the children. He claimed that the investor’s entire life is spent working for the bank as a slave and making EMI payments.
He concluded the post saying, “the rent for that same flat is close to 30-35k a month at max. You can rent all your life and still end up saving more than 50% of the cost. Invest that amount in financial assets that appreciate, and you’ll be better off than someone who “owns” a flat.”
Netizens react
The post received mixed responses from netizens with some saying owning an apartment during an unstable environment sounded risky and others highlighting the benefits of home ownership.
One user said, “At this age of uncertainty in employment buying flats with huge EMI is the bad financial decision one can make.”
Another user said, “Owning flat in this unstable environment sounds pretty risky. Twenty years ago: would have been the best choice.”
“Live on rent in flat. Invest in land in some remote place that has the scope to get included in the city, so that one can make profit,” said one user.
“Save, invest, make 2 crores. Live off the returns of that money in a tier 2 city or far outskirts. Chill life,” said another user.
One user said, “Buy that house. 1BHK of your own house is more precious than a 3BHK of someone else’s house.”
Another user said, “wont the rent increase every year why are you assuming it will stay stagnant at 30-35k.”
One user said, “Flats DO NOT DEPRECIATE. As long as there is migration into our cities, there will not be any depreciation. You will need to do building redevelopment, but that only increases the value of your property because mostly FSI increases and more flats get built in the same location.”
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